State v. City of Hudson, 35104

• Decision Date: 05 May 1950
• Docket Number: No. 35104,35104
• Citation: 42 N.W.2d 546,231 Minn. 127
• Parties: STATE v. CITY OF HUDSON.
• Court: Minnesota Supreme Court

Page 546

42 N.W.2d 546

231 Minn. 127

STATE v. CITY OF HUDSON.

No. 35104.

Supreme Court of Minnesota.

May 5, 1950.

Syllabus by the Court.

A municipality of a foreign state owning and operating a toll bridge located partly in such state and partly in this state is not entitled under the provision of Minn.Const. art. 9, § 1, exempting from taxation 'public property used exclusively for any public purpose,' to exemption from taxation of the portion of such bridge located in this state.

Wendell A. Petersen, City Attorney, Hudson, Wis., Cole Oehler, St. Paul, Linn Firestone, St. Paul, for appellant.

J. A. A. Burnquist, Attorney General, Charles P. Stone, Assistant Attorney General, Wm. T. Johnson, County Attorney, Stillwater, for respondent.

PETERSON, Justice.

The state having recovered a judgment for the amount of personal property taxes for the year 1947 assessed on the portion of the interstate bridge owned and operated by the city of Hudson, Wisconsin, located in Washington county, Minnesota, the city appeals.

The question for decision is whether a municipality of a foreign state owning and operating a toll bridge located partly in such state and partly in this state is entitled, under a constitutional provision, Minn.Const. art. 9, § 1, M.S.A., exempting from taxation public property used exclusively for any public purpose, to exemption from taxation of the portion of such bridge located in this state.

The interstate toll bridge owned and operated by the city of Hudson, Wisconsin, extends from that city across the St. Croix River into Washington county, Minnesota. The bridge was constructed under authorization granted by Act Feb. 18, 1911, 36 Stat. c. 119, p. 921, and March 23, 1906, 34 Stat. c. 1130, p. 84, 33 U.S.C.A. § 491 et seq. It has been designated as part of the route of U.S. highway No. 12. Toll rates are fixed by the War Department of the United States. All tolls are collected in the state of Wisconsin and are paid into the treasury of the city of Hudson. No part of the operation of the bridge inures to any person or to any other corporation, public or private. The personal property tax in question was imposed upon the portion of the bridge located in Washington county, Minnesota. The city claims that the portion of the bridge located in Minnesota is exempt from taxation by the state of Minnesota under the provision of Minn.Const. art. 9, § 1, which reads: '* * * public property used exclusively for any public purpose, shall be exempt from taxation, * * *.' In support of its claim, the city contends that it is a public corporation of the state of Wisconsin; that as such it owns and operates the bridge; and that, because it is a public corporation and as such owns and operates the bridge, the bridge is public property used exclusively for public purposes and as such is exempt from taxation by the state of Minnesota. In opposition thereto, the state contends that, while the city is a public corporation of the state of Wisconsin and as such owns and operates the bridge, the city has no attributes of a Public nature within the state of Minnesota so far as concerns its ownership and operation of the portion of the bridge located therein, and that, on the contrary, the city's status in Minnesota is the same as that of any Private corporation owning and operating property within this state. The state's theory is that the Public character of the city of Hudson ceased at the state line between the states of Wisconsin and Minnesota and that, after the city crossed such line, it had no Public attributes of any kind. No point has been made that either the federal authorization to construct the bridge or the federal designation thereof as part of the route of the U.S. highway mentioned has any bearing on the question to be decided.

A state adopts a constitution for its own government and not that of other states. It could not be otherwise under our federal system of government, for the reasons that thereunder the jurisdiction of a state is coextensive with its boundaries and operative upon all persons and things located therein, First Trust Co. of St. Paul v. Matheson, 187 Minn. 468, 246 N.W. 1, 87 A.L.R. 478, and that, conversely, such jurisdiction does not extend beyond its boundaries. In re C. A. Taylor Logging & Lumber Co., D.C., 28 F.2d 526; 59 C.J., States, § 3. It makes no difference in this connection that the state, as here, has concurrent jurisdiction with other states over boundary waters such as rivers. See, State v. George, 60 Minn. 503, 63 N.W. 100; 6 Dunnell, Dig. § 8826; Roberts v. Fullerton, 117 Wis. 222, 93 N.W. 1111,65 L.R.A. 953, and note. Such concurrent jurisdiction of one state does not extend to permanent structures within the boundary of the other state, even though they may be attached to the river bed. Wedding v. Meyler, 192 U.S. 573, 24 S.Ct. 322, 48 L.Ed. 570, 66 L.R.A. 833; Buck v. Ellenbolt, 84 Iowa 394, 51 N.W. 22, 15 L.R.A. 187; Roberts v. Fullerton, supra; 49 Am.Jur., States, Territories, and Dependencies, § 24.

Because a municipal corporation is organized under authority of the state wherein it is situated with subordinate governmental power--legislative, executive, and judicial--to administer the local and internal affairs of the community and to assist locally in the civil government of the state as a branch thereof, a municipal corporation derives its 'public character' from the law of the state creating it. 49 Am.Jur., States, Territories, and Dependencies, § 6.

It follows as a logical consequence and as elementary law that a state acquiring ownership of property in another state does not thereby project its sovereignty into the state where the property is situated. The public and sovereign character of the state owning property in another state ceases at the state line, with the consequence that its ownership of property in the foreign state is in its corporate capacity without any sovereign or public attributes. To all intents and purposes, ownership by a state of property located in another state is the same as that of a private corporation. Georgia v. City of Chattanooga, 264 U.S. 472, 44 S.Ct. 369, 68 L.Ed. 796; Susquehanna Canal Co. v. Commonwealth, 72 Pa. 72. The rule applies to a municipality owning property in a state other than the one of its creation. As said in City of Cincinnati, Ohio, v. Commonwealth, 292 Ky. 597, 604, 167 S.W.2d 709, 714: '* * * A municipality operating beyond the boundaries of the sovereignty creating it, is universally regarded as a private corporation with respect to such operations. Even a state may not claim sovereign immunity for its business enterprises conducted beyond its borders.'

'Exemption' of public property from taxation involves an exercise of the state's governmental power with respect to its internal economy. What is denominated an Exemption from taxation of public property used for public purposes is in fact nothing more than a declaration of Immunity therefrom which would exist in the absence of a provision for exemption. Exemption from taxation of privately owned property is a public grant in the nature of a favor justifiable upon grounds of public policy. Immunity from taxation is an attribute of sovereignty, and, because such is its nature, it is presumed that the sovereign would not tax itself. As held in Foster v. City of Duluth, 120 Minn. 484, 140 N.W. 129, 48 L.R.A.,N.S., 707, there is a clear distinction between Exemption and Immunity, in that Exemption from taxation involves the supposition that the property so exempted otherwise would be subject to taxation, and Immunity from taxation involves the thought that, absent a constitutional or statutory provision for exemption, the property would not be subject to taxation because of its public nature. We there said, 120 Minn. 486, 140 N.W. 130: '* * * In the one case the property exempted is private property, which for good reasons it is deemed wise or just to relieve from the burden of taxes that it would otherwise be obliged to sustain; in the other case (that of public property used for public purposes) the property is owned by the state, or by its agencies, is devoted to a public use, and is not subject to taxation for reasons that are different in character, among which may be suggested the fact that the taxation of public property owned by the state or its municipal divisions would mean that the state would be taxing itself in order to raise...